Thanks very much for your response to my previous post. I will try to
clarify my T1, T2, etc. as you requested.
T1 is the beginning of some production period in the PAST (could be the
previous period, or five years ago, etc.) If the past period is the prior
period, as in your framework, then T1 would correspond to your 1B.
T2 is the BEGINNING of the CURRENT period. If the past period is the
prior period, as in your framework, then T2 would correspond to your 2B.
T3 is the END of the CURRENT period. Which would correspond 2E in your
framelwork.
Technological change is assumed to take place between T1 and T2 and
between T2 and T3.
The point that you make that I would emphasize is that the value of
the capital in your period 2 is not simply the historical cost minus the
actual depreciation, but also is devalued as a result of technological
change (moral depreciation). In my framework, this means that the value
of the capital in the current period is determined at T2, not at T1, as I
said in my original post.
Is this clearer?
Have I interpreted you correctly?
Looking forward to your reply.
Comradely,
Fred